PHOENIX (AP) - Bank of America Corp. violated Arizona's consumer fraud law by misleading consumers trying to get home loan modifications, state Attorney General Terry Goddard said Friday as he filed a civil lawsuit against the bank.
The bank also violated the terms of a 2009 consent agreement it signed requiring the bank's Countrywide mortgage subsidiary to implement a loan modification program, Goddard said.
Hundreds of homeowners kept making their mortgage payments because Charlotte, N.C.-based Bank of America repeatedly assured them their loan was being modified, he said. Instead, many lost their homes anyway.
"Those people could have used that money for something else," Goddard said. "They were deceived into continuing to make mortgage payments when they had no hope of saving their homes."
The attorney general's office was deluged with consumer complaints and launched an investigation more than a year ago, Goddard said. Settlement talks with the bank that began in April ultimately collapsed Thursday.
Calls seeking comment from Bank of America were not immediately returned.
The lawsuit, filed in Maricopa County Superior Court, alleges that the bank has repeatedly violated terms of the consent agreement. The pact was expected to lead to loan modifications for thousands of Countrywide customers in Arizona, which had the nation's fourth-highest foreclosure rate last month, according to RealtyTrac Inc. But the company failed to make timely decisions on modification requests and went ahead with foreclosures, Goddard said.
Goddard said Nevada is expected to file a similar lawsuit later Friday.
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